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Did BAE deliver on its arms deal offset obligations? - David Maynier

DA MP submits PAIA application for two DTI reports into NIPP

DA to submit PAIA application for BAE/Saab arms deal documents

The Democratic Alliance (DA) will submit a request, in terms of the Promotion of Access to Information Act (No. 2 of 2000), to the Department of Trade and Industry (DTI)  for access to two reports related to BAE/Saab's compliance with offset obligations under the National Industrial Participation Programme (NIPP).

In terms of the strategic defence package, signed on 03 December 1999, BAE/Saab incurred an offset obligation under NIPP. The NIPP programme, administered by the DTI, requires any state purchase, in excess of US$ 10 million, from firms selling foreign products, to effectively reinvest in South Africa.

BAE/Saab, who supplied the 24 Hawk and 26 Gripen fighter jets, were obliged, in terms of the contract, to reinvest a total of US $ 7.2 billion in South Africa by 2011.
The DTI is responsible for monitoring the NIPP. However, the department's reports are at best obscure, not least because company names do not appear in the annual report, making it difficult to determine if BAE/Saab were complying with their obligations under the NIPP.

However, two reports commissioned by the DTI suggest that there were problems relating to BAE/Saab's compliance with the NIPP.

A report, prepared by SAB&T Chartered Accountants, relating to BAE/Saab's involvement in a defence department demilitarization project, found that "government was not getting optimal value". Another report, prepared by NAD Auditors, relating to BAE/Saab's involvement in Denel Saab Aerostructures, suggests that there was a failure to meet "key performance areas".

Clearly, the consultant's reports suggest that all was not well with BAE/Saab's compliance with the NIPP.

The focus of the new arms deal revelations in Sweden are directly related to BAE/Saab's obligations under the NIPP.

The agreement between Sanip (Pty) Ltd and Hlongwane Consulting (Pty) Ltd, released last week, focused on the "consultancy services" related to the BAE/Saab's obligations under the NIPP. The consultancy services, which Hlongwane Consulting (Pty) Ltd was contracted to provide, included:

  • "to take all reasonable and necessary steps to ensure that the Company is granted or is able to claim NIP credits from the South African Government as a result of its involvement in any NIP Project; and
  • to carry out any other associated tasks relating to the marketing and implementation of NIP projects as may be reasonably required by the Company."

 

The total value of the contract, over the five-year period commencing on 01 August 2003, would have been R98 million and included a bonus of R30 000 000 upon the successful completion of "Milestone 3" ("discharge of at least investments of USD 2 000 000 000 and exports of USD 5 200 000 000 of NIP by April 2011") of the NIPP by BAE/Saab.

The reports in the possession of the DTI will provide new insights into BAE/Saab's compliance with the NIPP.

The DA will, therefore, submit a request, in terms of the Promotion of Access to Information Act (No. 2 of 2000), for access to the reports by SAB&T Chartered Accountants and NAD Auditors on BAE/Saab's compliance with the NIPP.

Statement issued by David Maynier MP, DA Shadow Minister of Defence and Military Veterans, June 27 2011

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